I think more than a 16 team competition in this country is too many. There's just not enough money or support for a single competition to really enable more than 16 teams.
Plus I think 14-16 teams is a good, concise number. The AFL seems quite strong with a 16 team competition, and covers WA, SA, VIC, NSW and QLD. The NRL still has some work to do as we only cover QLD, NSW(&ACT), VIC and NZ. There is plenty of potential in SA and WA but just throwing teams in is not the answer.
I think there are a couple of Sydney based teams that are potentially on their last legs. If you look at the AFL, there are 10 VIC based teams, while the NRL has 11 teams within the NSW & ACT region in a 15 team competition. However, outside of VIC, the AFL only needs two teams in both WA and SA, then one each in NSW and QLD. Comparing this setup with the NRL, outside of NSW (&ACT), there are basically five "states" we can cover, which are QLD, NZ, VIC, WA and SA. Because the new Gold Coast franchise is gaining momentum, we'd most likely see three QLD teams. That leaves one each for NZ, VIC, WA and SA, meaning two would have to be "chopped" from the NSW/ACT area to make a 16 team competition.
One thing that makes that even more tricky is the Central Coast prospect. If this went ahead, the NRL would have to either cull or move three Sydney-based clubs, or make it an 18 team competition. Considering that the original unified competition pushed very strongly for a 14 team competition in 1998, this is probably unlikely.
So instead of culling teams, the franchises could be moved. I think Manly needs to stay because of the region. Souths would probably be first in line to move, perhaps to become the Southern Rabbitohs (SA). The Cronulla region could be absorbed by existing Sydney clubs, possibly even Manly, hence maybe a Central Coast Sharks. I don't think Penrith and Parramatta should merge because they are two huge, seperate regions. However the Tigers could be a possibility - the Dragons, Penrith, Parramatta or even Bulldogs would be fine options for Tigers juniors. Which would mean the Wests Tigers would probably become the Western Tigers (WA). That would leave us with potentially the following competition:
Sydney Roosters
Canterbury Bulldogs
Penrith Panthers
Parramatta Eels
Manly Sea Eagles
St. George/Illawarra Dragons
Central Coast Sharks
Newcastle Knights
Canberra Raiders
Brisbane Broncos
Gold Coast Chargers
North Queensland Cowboys
Melbourne Storm
New Zealand Warriors
Western Tigers (Perth)
Southern Rabbitohs (Adelaide)
The only remaining problem posed here is the amount of time it would take for the new teams to reach their potential. The existing clubs, particularly the Sydney-based ones, would probably be very strong for a period.